Matheson Post-Brexit Guide To Cross-Border Disputes

• Published date: 24 May 2021
• Subject Matter: Government, Public Sector, International Law, Litigation, Mediation & Arbitration, Constitutional & Administrative Law, International Trade & Investment, Arbitration & Dispute Resolution
• Law Firm: Matheson
• Author: Ms Julie Murphy-O'Connor

For parties involved in cross-border civil disputes, the departure of the UK from the EU gives rise to a number of issues. The post-Brexit EU-UK Trade and Cooperation Agreement (the "TCA") was agreed at the eleventh hour on 24 December 2020 and governs the immediate future relationship between the EU and the UK from 1 January 2021. Whilst it includes provisions for legal services, notably absent from the TCA are any provisions dealing with the mutual recognition of UK judgments or broader judicial cooperation.

This, in many ways, impacts more on aspects of litigation than the EU and UK's new trade deal, in particular, around the issues of jurisdiction, and the recognition and enforcement of judgments. In both of these areas, a relatively hard Brexit is now the reality and parties need to be aware of the ramifications these changes present.

We are almost two months on from the conclusion of the TCA and there is no further update on whether the EU will allow the UK to accede to the Lugano Convention. The UK applied to join in April 2020 and the contracting parties (the EU, Iceland, Norway and Switzerland) have a year to make a decision, which must be unanimous. The non-EU contracting countries have supported the UK's accession. So far, the EU has not.

With this in mind, we are pleased to bring your our guide, which is intended to explain in simple terms the landscape for international and cross-border disputes involving the UK post-Brexit, in particular in relation to what the practical implications of these developments are for parties with a preference for English law and jurisdiction.

The guide looks at:

• jurisdiction;
• recognition and enforcement of judgments;
• whether the effectiveness of arbitration and governing law clauses is impacted;
• the impact on issues such as service of proceedings and taking of evidence and
• what the practical implications of these developments will be for parties with a preference for English law and jurisdiction clauses and what steps you can take to mitigate against potential difficulties in this regard in the future.

Jurisdiction Clauses

The Brussels Regime¹ (which applies to EU member states) and the Lugano Convention² (which applies between EU member states and EFTA³ states) set out clear jurisdictional principles to avoid a multiplicity of actions in a number of jurisdictions. These treaties no longer apply to the UK for proceedings commenced after 31 December 2020.⁴

The TCA therefore represents a relatively hard Brexit in relation to the question of jurisdiction. As a result, where the Hague Convention⁵ (dealt with below) is not applicable there is a possibility of parallel proceedings between the UK and the EU which could lead to inconsistent judgments in different jurisdictions.

Questions of jurisdiction in civil and commercial matters across EU member states are now dependent on rules of private international law (which in Ireland is based on the common law) unless they relate to proceedings to which the Hague Convention applies.

The Hague Convention provides for the allocation of jurisdiction to courts of contracting states but is much more limited in scope. The contracting states are the EU, Mexico, Montenegro, Singapore and the UK (as of 1 January 2021). (No EFTA country has acceded to the Hague Convention as yet.) For the Hague Convention to apply:

• There must be an agreement in place between the parties to the dispute containing an exclusive choice of court agreement. This is generally understood⁶ not to include asymmetric or unilateral jurisdiction clauses.⁷
• The choice of court agreement must have been entered into after the accession date (ie after 31 December 2020).⁸ In order to minimise disruption, parties to contracts entered into during this period may wish to consider restating or re-executing any jurisdiction clause contained therein.
• Only judgments on the merits are covered. It is not therefore possible to seek enforcement of interim rulings as would be the case under the Brussels Regime.
• The subject matter of the proceedings must come within the scope of the Hague Convention.

Article 26(6) of the Hague Convention provides that where neither party is domiciled in the UK (or another non-EU Hague contracting state, ie Mexico, Singapore and Montenegro) the rules of Brussels Recast will take precedence.⁹ Articles 33 and 34 of Brussels Recast have been interpreted...